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Chapter 8

GMS 200 - Chapter 8.docx

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Ryerson University
Global Management Studies
GMS 200
Shavin Malhotra

GMS 200 – Chapter 8 Organizing As a Management Function - Organizing – the process of arranging people and other resources to work together to accomplish objectives o Involves creating a division of labour and then coordinating results to achieve a common purpose o Creates structure – divide up the work, arrange resources, and coordinate activities - Once planning is done, organizing begins the process of implementation by clarifying jobs and working relationships/ - The strategic leadership challenge is to choose the best organizational form to fit strategy and other situational demands What is Organization Structure? - Organization Structure - system of tasks, reporting relationships and communication linkages (the way in which various parts of an organization is formally arranged) - Any structure should allocate tasks through a division of labour - Organizations often change structure in attempt to improve performance Formal Structure - Organizational Chart – describes the arrangement of work positions within an organization o Defines various positions and job titles, as well as lines of authority and communication between them - Formal structure – the official structure of the organization o How organization is intended to function o Formal structure includes:  Division of work – positions and titles show work responsibilities  Supervisory relationships – lines show who reports to whom  Communication channels – lines show formal communication flows  Major subunits – positions reporting to a common manager shown  Levels of management – vertical layers of management are shown Informal Structures - Behind every formal structure lies an informal structure o Informal structure – set of unofficial relationships among an organization’s member  If could be drawn, would show who talks to and interacts with whom, regardless of titles - No organization can be fully understood without gaining insight into informal structure as well as formal one - Social network analysis – identifies the informal structures and their embedded social relationships that are active in an organization o Ask people to identify other whom they turn to for help often, whom they communicate regularly and who energize and de-energize them o Information is helpful for redesigning formal structure for better performance and helps legitimize informal networks people use in daily work - Informal structures and social networks are in many ways essential to organizational success - Emergent and spontaneous relationships of informal structure allow people to make contacts with other to get things done - Are sources of emotional support and friendship that satisfy important social needs - Informal structures can be susceptible to rumour, carry inaccurate information, breed resistance to change, and even divert work efforts from important objectives Traditional Organization Structures - Performance should improve when people are allowed to specialize and become experts in specific jobs or tasks - Departmentalization – process of grouping people and job into work units - Resulted in three major types of organizational structures: functional, divisional and matrix structures Functional Structures - Functional Structures – People with similar skills and performing similar tasks are grouped together into formal work units o Share technical expertise, interests, and responsibilities - Key point is that members of a function work within their areas of expertise - If each function does it work properly, expectation is business will operate successfully Advantages of Functional Structures - Functional structures work well in smaller organizations dealing with only one or few products or services o Work best in stable environments where problems are predictable and demands for change and innovation is limited - Major advantages of functional structures include: o Economies of scale with efficient use of resource o Tasks assignments consistent with expertise and training o High-quality technical problem solving o In-depth training and skill development within functions o Clear career paths within functions Disadvantages of Formal Structures - Common problems include difficulties in pinpointing responsibilities for things like cost containment, product or service quality - Functional chimneys problem – a lack of communication, coordination, and problem solving across functions - Sense of common purpose gets lost to self-centred and narrow point - When problems occur between function, often refer to high levels for resolution than being addressed by people at same level o This slows decision-making and can harm organizational performance Divisional Structures - Divisional Structures – groups together people working on the same product, in the same area, with similar customers, or on same processes - Common in complex organizations Product Structures - Product structures – group together jobs and activities focused on a single product or service - Clearly identify costs, profits, problems, and successes in a market area with a central point of accountability o Prompts managers to be responsive to changing market demands and customer tastes o Common in large organizations Geographical Structures - Geographical structures – groups together people and jobs performed in the same location - Typically used when there is need to differentiate products or services in various locations such as different parts of a country o Focus attention on unique cultures and requirements of particular regions Customer Structures - Customer Structures – group together jobs and activities that are serving the same customers or clients - Goal is to best serve the special needs of the different customer groups - Common structure in consumer product industry Process Structure - Work process – group of related tasks that collectively creates something of value to a customer - Process structure – groups together jobs and activities that are part of the same process Advantages and Disadvantages of Divisional Structures - Organizations use divisional structures to avoid functional chimneys problems and other disadvantages of functional structures - The potential advantages of divisional structures include: o More flexibility in responding to environmental changes o Improved coordination across functional departments o Clear points of responsibility for product or service delivery o Expertise focused on specific customers, products and regions o Greater ease in changing size by adding or closing down divisions - Disadvantages include o Reduce economies of scale and increase cost through the duplication of resources and efforts across divisions o Can also create unhealthy rivalries as divisions compete for resources and top management attention Matrix Structures - Matrix Structure – combines functional and divisional approaches to emphasize project and program teams - Attempt to gain advantages and minimize the disadvantages - This is accomplished by using permanent teams that cut across functions to support specific products, projects, and programs - Workers in a matrix belong to at least two formal groups at the same time o A functional group and a product, program, or project team o Also report to two bosses – one within function and other within team - Found in multi-national corporations, where they offer flexibility Advantages of Matrix Structure - The potential advantages of matrix structures include: o Better cooperation across functions o Improved decision-making; problem solving takes place at the team level where the best information is available o Increase flexibility in adding, removing, or changing operations to meet changing demands o Better customer service; there is always a program, product, or project managers o Better performance accountability through the program, product, or project managers o Improved strategic management; top managers freed from lower level problem solving Disadvantages of Matrix Structures - Two boss system is susceptible to power s
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